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Monday, May 13, 2013

The Dismal Political Economist Interviews John Maynard Keynes – For the Second Time

Because He Wanted to Get His Points Across – Again

[Editor’s note: About
two years ago The Dismal Political Economist had an exclusive interview
with the great economist John Maynard Keynes. No other Forum had an interview with Mr.
Keynes, in part because he did not want to do them and in part because he has
been deceased for many decades. The
interview is a follow up requested by Mr. Keynes, or would have been had he
been alive to read the first one.]

Q. So Mr.
Keynes, after several years of European economic policy following The
Great Recession has produce the near catastrophic events you would have predicted, do you think you have been vindicated?

Keynes: Well let’s
see. My policy would have been to
support fiscal stimulus and oppose austerity, as austerity would produce lower
growth and higher unemployment. European
leaders imposed austerity. They have
lower growth and higher unemployment. So
what do you think?

Aren’t
you worried about inflation from excessive increases in monetary reserves?

Keynes: I am worried
that inflation is not occurring, because it would be helpful. Inflation produces lower real wages while keeping nominal and that
improves an economy in a recession. It also produces positive expectations that lead to investment that improves an economy. It’s in the book, although looking back it's also pretty much commn sense. Common sense seems to be lacking these days.

Is Germany
helpful or harmful in all of this?

Keynes: When exactly
has Germany
been helpful on the world stage? Has something changed? I
suppose we should be grateful they have given up the idea of mass murder and declarations of war on everyone. After World War II I helped
implement policy that produced German economic renaissance. Now they have helped produce a new European
depression. That is terribly depressing.

In the
U. S.
conservative politicians reject your work and want to follow Hayek. Are you insulted?

Keynes: How can I be
insulted by people stupid enough to embrace economics from 90 years ago. Exactly how is the world relevant to Austria in the
1920’s?

But
your work is rather dated also, isn’t it?

Keynes: Well yes, my
original writings are. But you know,
people like Paul Samuelson, Paul Krugman (what’s with the Paul thing?) and
about ten thousand or more other economists have tested, refined, improved and
advanced what I am happy to say is still called Keynesian economics. Conservatives seem stuck on a literally
implementation of a nutty Austrian.

Uh,
sorry to bring this up but a Harvard Prof recently argued that your policy
was wrong and distorted because of your, uh, not sure how to put this,
sexual orientation. What is your
response?

Keynes: Gosh, Harvard
used to be a great school. What made
them lose their faculties and hire idiots like that?

Uh,
nice pun. But aren’t you offended?

Keynes: Well no, how
can a person of my intellect be offended by someone so obviously lacking in
even basic knowledge. Now if someone can
do the research and empirical studies and find situations where Keynesian
economics (if you don’t mind my calling it that) has failed I would be happy to
pay attention to them. Is there any
situation in the current economic crisis where fiscal policy has failed and
austerity has succeeded?

Well
no, the policy derived from your work has proved to be correct 100% of the
time. In fact, you would think
there would be at least one occasion where it didn’t work.